Why is Wal-Mart hiring so many temp workers?

The retail giant denies the strategy is aimed at reducing costs, but the move could sidestep Obamacare enrollment.

By Aimee Picchi Jun 13, 2013 12:22PM

Wal-Mart store in Secaucus, New Jersey / Jin LeeWal-Mart store in Secaucus, New Jersey / Jin Lee/Bloomberg via Getty Images/Bloomberg via Getty ImagesAs Wal-Mart (WMT) chief executive Mike Duke said Friday at the company's annual meeting, compliance with the nation's laws "is an absolute." He vowed to "do the right thing" and praised the company's foundation of integrity. 

But while Wal-Mart is meeting the letter of the law in a new hiring practice, it may face additional questions about its motives. That's because the retailer is hiring only temporary workers in many locations, a move that Wal-Mart denies is tied to cutting costs. Yet doing so would allow it to sidestep the need to enroll those employees in company-sponsored health insurance plans under Obamacare.

A Reuters survey of 52 Wal-Mart stores found that 27 were hiring only temps, while 20 added a mix of temp, part-time and full-time workers. Five stores weren't hiring at all. 

The move marks the first time the retailer has relied on temps outside of the busy holiday shopping season. 

What's the reason for the strategy? Wal-Mart says it's to make sure the stores are "staffed appropriately," spokesman David Tovar told Reuters. He added that temporary jobs pay the same starting rate as other positions. 

However, one store manager said he's hiring just temps because "it's a company direction at the present time."

Lower costs are likely part of the appeal of temporary workers, especially as U.S. businesses prepare for Obamacare to take effect in 2014, because it requires large employers to provide health care coverage for full-time employees. 

Wal-Mart has been coming under fire increasingly for its low wages and employment practices. A recent report from congressional Democrats claims a single Wal-Mart Supercenter in Wisconsin may cost taxpayers as much as $1.7 million per year because its low-earning workers often have to depend on food stamps and other government aid. 

If Wal-Mart continues relying on temp workers, those costs to taxpayers could rise, given Obamacare's enrollment mandate. Some of those temp workers could end up on states' expanded Medicaid rolls, for example. 

Wal-Mart typically hires temporary workers on 180-day contracts, Reuters notes. Because work hours can vary widely, managers are often unsure whether a worker qualifies for full-time work. Under Obamacare, employers can measure hours for up to 12 months to check whether workers qualify. But because temps are hired on short contracts, it's unclear how many will make the cut. 

"A temporary worker may never get that far," Barbara McGeoch, a principal and health benefits expert at consulting firm Mercer, told Reuters. "They may never get the coverage."

Follow Aimee Picchi on Twitter at @aimeepicchi. 

More on moneyNOW

Jun 13, 2013 1:21PM
Walmart should FIRE every one of their top executives and then rehire them back  as temp help...see how quickly they will do that..NOT
Jun 13, 2013 1:05PM
Last week a friends son went and applied at Wal-Mart. He and others applying were told to return that afternoon and be sure they wore kaki pants and blue shirts. Upon returning they were told to start stocking shelves. After a little over an hour they were all called into the back room and told to go home they were not going to be hired. What kind of company does this? I have not shopped at Wallyworld for several years due to how they conduct business and this just confirmed I was doing the right thing.
Jun 13, 2013 12:55PM
Sounds like its time to quit shopping at Walmart.  I actually avoid the place like the plague.  Their employees are generally not on the ball anyhow.  I can remember last summer seeing an employee lying on the floor stocking shelves, saying "I'm new here, I don't know where anything is." Another person was working in the gardening department and when I asked if they had a particular item was told "I'm in charge of guarding the door, I cannot help you."  And if you ever have a return, its cheaper to just throw it in the trash than wait for the one person to handle the long line of customers.  

The place is a joke, and it's been a joke for years.  I strongly recommend Target, who consistently offers quite the opposite customer service experience.  

Of course if these people at Walmart are all temps working for $7.25 an hour, it make sense why they don't care about the customers.  If they are also getting NO BENEFITS of any kind, it even makes more sense.  In recent months, it has been reported that Walmart cannot even keep the shelves stocked.  Of course, if those same employees don't care, it makes sense that they would not stock the shelves either.  In all honesty, Walmart may want to just have a few security guards at each door, and a stock crew when they are closed.  Customers could scan their own stuff, and look for things with no help.  It may sound extreme, but this would be no different than what is currently being offered.  It sucks to shop there and it sucks to work there. The world could live fine without Walmart, where instead of paying $4.99 for an item, it could be had for $4.97.  Really, quite an amazing savings they offer!

Jun 13, 2013 1:20PM
Remember Wal-Mart advertising that they were going to hire some hundreds if not thousands of veterans?  Well, guess what?  They're being hired as Temporary Employees, so that Wal-Mart can avoid paying for health care and benefits, and the employees will be earning minimum wages and as temps or part-timers don't need to pay for overtime.
Jun 13, 2013 1:19PM
Greedy and evil .  All great empires eventually fall.  There day is coming....soon.
Jun 13, 2013 1:26PM
Hundreds of thousands of workers are losing hours due to this legislation. What did you expect? Providing healthcare to low-level, unskilled workers is not worth the cost to the business. Look for this to happen in retail, restaurants and all service sector jobs. I predict that 2 or 3  part time jobs will be the new normal for the working class within the next 5 years.
Jun 13, 2013 1:20PM
What health Insurance? Walmart does not offer Health Insuarnce unless you are on the Managements hire up list. Employee's must pay for their own Insurance out of their Minunum wage jobs. Then they have to make a choice of whether they want to eat and have electricity or Health Insurance. Been there.
Jun 13, 2013 1:19PM

Like many large companies, Wal-Mart is hiring temps in order to avoid having to provide some kind of minimal heal insurance to full time employees.  You hire lots of temps, at low hourly wages, they don't get any health benefits (but they have to buy their own insurance at bloated rates) and everybody is happy.


It's just away to avoid having to "go along" with Obamacare or whatever you want to call it.  It's another loophole that big companies and the insurance companies can use to screw as many people as possible seven ways from Sunday.


I have a friend who works for a fairly low hourly wage.  He works hard and all of his reviews indicate his performance always exceeds expectations.  After months of asking for more hours, and taking all he could get, he finally got to where he was getting 35-40 hours a week.


Then his employer called him in to tell him that, because of Obamacare, his hours would be cut to less than 27 a week. 


Employers are gaming the system already.  It isn't fair and it isn't right.  We will become a nation of part time/temp workers.

Jun 13, 2013 1:31PM
Its not just Wal-Mart.  My son works at a sport/convention center and 90% of them are part time with no benefits.   When employee quits, they have a new one in there by the end of the shift.
Jun 13, 2013 1:18PM
hire temps save$25 an hour give no benefits screw us .that's the walmart way,pay nothing then they have to buy #2-3 grade products from walmart because they can't afford to shop anywhere else. they put everyone out of business then they have a monopoly, just like gas distributors, like it or not its the truth and nothing will be done about it as long as your congressmen and senators hold millions in stock from these companies
Jun 13, 2013 1:24PM
ummm....every employer is doing that...   29 hours a week maximum...  Why pay for Obamacare if you don't have too?  

The imbecile '57 states' signed this, didn't he bother to read, or can he even read?

Sorry, but the democrat 'train wreck' is coming, and people will know who to vote out of office....
Jun 13, 2013 1:30PM
Self-Checkout??? Just another way to cut back on employees. I spoke to a store manager and she told me they are planning to install another 8 self-checkout stations. Normally, there are about eight of these in a store. That is EIGHT Americans out of work times three shifts for a total of TWENTY-FOUR. Now there will be SIXTEEN self checkout's for a total of FORTY-EIGHT people out of work, but the dollars will keep rolling in. I told the manager that I will use the regular checkout and she said "GOOD!". I told all my email contacts to use the regular checkout and they say the lines are horrendous. I told them I use them and if the ice-cream melts, I tell the clerk to replace it with a fresh one. I do NOT work for wally-world, I get NO benefit from doing somebody else's job and I refuse to put another American out of work, we have a Senate, House and P-electOTUS that are doing a great job of that already. I suggest we ALL do the same, use the regular checkout, AVOID the self checkout completely and help someone get a job . That is what GOOD American do, they help their fellow Citizens. Let Corporate Wal-Mart worship the all-mighty dollar. That's all they're good for, they sure as hell are NOT true Americans.
Jun 13, 2013 1:21PM
Temps and part timers get no benefits, Walmart makes MORE MONEY screwing employees.  And purchase a large amount of products out of country, and they say they are Patriotic.    Sounds like more people should boycott and show these MONEY GRUBBING #$@&* they forgot they are in America and we the consumer can make or break them.
Jun 13, 2013 1:23PM
Here comes Barry Obama-Care.  Everyone that can get to an exit file out of one of the exits.........like Wal-Mart is doing.  The Democrats have screwed the whole econcomy with their Nanny-State Socialism. 
Jun 13, 2013 1:32PM

My wife used to work for Wal-Mart and during one period of time they were instructed to hire "flexible part time help".  This was unveiled during their national meetings and was made very obvious this was a measure to keep them from having to pay benefits.  Same applies here.


Jun 13, 2013 1:24PM
Hiring temps is the new norm. Much more prevalent than it was 1--15yrs., ago. No bennies & no have to pay for obacare. We will truly find out in 2014.

Yes, hiring temps only, so that they don't have to pay benefits is an old trick of businesses.  It is to safe.


But Walmart will always take it a step further.  That's why many neighborhoods don't like to have them in the area.



In the movie Rainman (1988) he makes the claim that "K-mart sucks", well, the same can be said for Wal-mart.
Jun 13, 2013 1:15PM
Our family likes to call Walmart the Devil.
Jun 13, 2013 1:14PM
Walmart hires in so many Temps because 4 out of 8 people do not come back to work for them. They do not treat their employee's well nor pay them well. I have a relative that has worked for them and they tryed to get this person to work on their lot as a cart attendant during a bad storm lighting and all. Then if you say something they will send you home or send you in to do the Janitorial work without the proper atire.  
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